Ripple’s Legal Counsel Dismisses XRP Seizure Speculation

Ripple’s legal counsel, Bill Morgan, has firmly dismissed claims that the U.S. government could seize XRP tokens held in the company’s escrow accounts for national reserve purposes. Responding to analyst John Squire’s speculation, Morgan succinctly stated, “No it won’t,” shutting down the theory with a clear and direct rebuttal.

Technical Mechanisms for XRP Transfer Face Challenges

A theoretical mechanism to transfer escrowed XRP to government control was outlined by XRPL validator “Vet.” This approach involves setting the regular key of Ripple’s escrow accounts to a government-controlled address, allowing for a complete transfer through a single XRPL transaction. However, Ripple’s senior software engineer, Mayukha Vadari, pointed out significant limitations to such a method.

“Wouldn’t work if you only wanted to do a partial transfer, though — it’s an all-or-nothing solution,” explained Vadari, emphasizing the lack of flexibility in this proposed mechanism.

Additionally, Vet noted that every account could only be transferred to one address, further complicating the feasibility of this approach. Ripple’s escrow system is designed with multiple accounts, each holding a portion of the escrowed XRP, making a unilateral transfer impractical.

Ongoing SEC Settlement Process

The settlement process between Ripple and the U.S. Securities and Exchange Commission (SEC) continues to progress. Initial negotiations began on April 23, 2025, when Ripple signed an agreement, followed by SEC approval on May 8. Both parties have since secured court approval to hold appeals in abeyance, with a deadline set for June 16.

However, the settlement process has faced procedural hurdles. Judge Torres denied the first joint motion due to technical errors. A revised motion addressing Rule 60 requirements was filed on June 12, aiming to secure proper court approval for the settlement terms.

Under the agreed settlement, Ripple’s fine has been reduced to $50 million, and the injunction against XRP sales has been dissolved. Once finalized, both the appeal and cross-appeal will be dismissed, concluding years of litigation between Ripple and the SEC.

Ripple’s Escrow Structure and Market Stability

Ripple’s escrow system remains unaffected throughout the legal proceedings, despite speculation about potential government interference. The escrow accounts, which currently hold approximately 50 billion XRP, are designed to release up to 1 billion tokens monthly based on market conditions. This controlled release mechanism ensures market predictability and stability, benefiting both institutional users and the broader XRP ecosystem.

Legal experts emphasize that government seizure of cryptocurrency assets typically requires evidence of criminal activity or national security threats. Ripple’s SEC case is civil in nature and does not involve any allegations of criminal wrongdoing, making asset forfeiture highly unlikely.

The company’s escrow structure, which aims to stabilize the XRP market, continues to operate as intended, reinforcing Ripple’s commitment to transparency and market consistency.

Key Takeaways for Investors

  • The U.S. government is unlikely to seize Ripple’s escrowed XRP assets, as confirmed by legal counsel and experts.
  • Theoretical mechanisms for transferring escrowed XRP face significant technical limitations and lack practical feasibility.
  • Ripple’s SEC settlement reduces fines and resolves legal uncertainties, creating a clearer path forward for the company and XRP.
  • The escrow system provides predictable XRP releases, ensuring market stability and supporting institutional adoption.

As Ripple navigates its legal and operational challenges, its escrow structure and settlement progress underscore its effort to maintain stability within the cryptocurrency market.

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